Published On:Friday, November 11, 2011
Posted by joko
Stock markets gain after Italy austerity vote
Stock markets have risen after Italy's senate voted to adopt a package of austerity measures.
Shares in US and Europe rose, while the cost of borrowing facing Italy retreated, having reached a record earlier in the week.
The Italian senate's vote begins a process that should see Italian Prime Minister Silvio Berlusconi quit.
Investors are hopeful that a new government will take the steps necessary to calm markets.
The US Dow Jones share index rose 1.6%. German stocks gained 2.8% and in the UK the FTSE 100 share index climbed 1.3%.
Meanwhile, the new Greek prime minister pledged to keep the country in the euro.
Growth fears
During a dramatic week, Mr Berlusconi on Tuesday said that he planned to resign after failing to win an absolute majority in the lower house of parliament in a vote on the budget.
KEY DATES AHEAD
- Over the next week: The new Greek unity government faces a confidence vote. A new government in Italy is formed, or failing that, elections are called.
- 20 November: Spanish elections. The opposition Popular Party holds a commanding lead.
- 29 November: Final vote on Portugal's budget for 2012.
- 29-30 November: Meeting of European finance ministers.
- 6 December: New Irish budget for 2012 is decided.
But all this came as the European Union on Thursday said it had drastically cut its growth forecast for the eurozone in 2012, from 1.8% down to just 0.5%.
"Growth has stalled in Europe and there is a risk of a new recession," said European Commissioner Olli Rehn.
French debt woes
In a sign of how strained European finances have become, Standard & Poor's accidentally released a message on Thursday saying that it had downgraded French debt from its top AAA rating.
S&P said it was investigating what had gone wrong and stressed that France still had an AAA rating.
However, S&P's error came on the day that the difference between the yield of French and German bonds hit a record high.
On Friday, yields on German 10-year bonds - the safest in Europe - were 1.85%, while the yield on French debt was 3.37%.
Meanwhile, Greece, which has been bailed out twice and is undergoing painful austerity cuts, has a new Prime Minister, Lucas Papademos.
Mr Papademos, a former European Central Bank vice-president, was named on Thursday after several days of talks.
He said his first priorities would be to ratify the 130bn-euro rescue package agreed at an EU summit last month